
(Dollars in Millions)				Accumulated		Net Book		Annual Depreciation	Estimated Useful Life	Depreciation
December 2024		Cost		Depreciation		Value		Rate	(Avg. Years)	Method
Road
	Rail and Other Track Material	$	9,883	$	(2,199)	$	7,684	2.5%	41	Group Life
	Ties	7,269		(2,252)		5,017		3.5%	28	Group Life
	Grading	2,813		(699)		2,114		1.3%	75	Group Life
	Ballast	3,494		(1,159)		2,335		2.6%	38	Group Life
	Bridges, Trestles, and Culverts	3,234		(572)		2,662		1.7%	60	Group Life
	Signals and Interlockers	3,476		(1,480)		1,996		4.1%	24	Group Life
	Buildings	1,498		(568)		930		2.5%	40	Group Life/ Straight Line (a)
	Other	6,017		(2,719)		3,298		4.1%	25	Group Life/ Straight Line (a)
Total Road		37,684		(11,648)		26,036
Equipment
	Locomotive	5,252		(2,175)		3,077		3.8%	26	Group Life
	Freight Cars	2,311		(407)		1,904		3.1%	32	Group Life
	Work Equipment and Other	3,599		(2,303)		1,296		8.9%	11	Group Life/ Straight Line (a)
Total Equipment		11,162		(4,885)		6,277
Land		2,276		—		2,276		N/A	N/A	N/A
Construction In Progress		1,069		—		1,069		N/A	N/A	N/A

Total Properties		$	52,191	$	(16,533)	$	35,658


(Dollars in Millions)				Accumulated		Net Book		Annual Depreciation	Estimated Useful Life	Depreciation
December 2023 (a)		Cost		Depreciation		Value		Rate	(Avg. Years)	Method
Road
	Rail and Other Track Material	$	9,498	$	(2,153)	$	7,345	2.5%	41	Group Life
	Ties	7,020		(2,131)		4,889		3.5%	28	Group Life
	Grading	2,796		(668)		2,128		1.3%	75	Group Life
	Ballast	3,424		(1,119)		2,305		2.6%	38	Group Life
	Bridges, Trestles, and Culverts	3,121		(525)		2,596		1.7%	60	Group Life
	Signals and Interlockers	3,376		(1,351)		2,025		4.1%	24	Group Life
	Buildings	1,530		(608)		922		2.5%	40	Group Life/ Straight Line (b)
	Other	5,786		(2,546)		3,240		4.1%	25	Group Life/ Straight Line (b)
Total Road		36,551		(11,101)		25,450
Equipment
	Locomotive	4,952		(1,981)		2,971		3.8%	26	Group Life
	Freight Cars	2,300		(378)		1,922		3.1%	32	Group Life
	Work Equipment and Other	3,391		(2,100)		1,291		8.9%	11	Group Life/ Straight Line (b)
Total Equipment		10,643		(4,459)		6,184
Land		2,272		—		2,272		N/A	N/A	N/A
Construction In Progress		815		—		815		N/A	N/A	N/A

Total Properties		$	50,281	$	(15,560)	$	34,721

The Company’s capital investment includes purchased and self-constructed assets and property additions that substantially extend the service life or increase the utility of those assets. Indirect costs that can be specifically traced to capital projects are also capitalized. The Company is committed to maintaining and improving its existing infrastructure and expanding its network capacity for long-term growth. Rail operations are capital intensive and CSX accounts for these costs in accordance with United States generally accepted accounting principles ("GAAP") and the Company’s capitalization policy. All properties are stated at historical cost less an allowance for accumulated depreciation.

The Company’s largest category of capital investment is the replacement of track assets, which is primarily completed by CSXT employees, as well as the acquisition or construction of new assets that enable CSX to enhance its operations or provide new capacity offerings to its customers. Costs for track asset replacement and capacity projects that are capitalized include:

Labor is a significant cost in self-constructed track replacement work. CSXT engineering employees directly charge their labor to the track replacement project (the capitalized depreciable property). In replacing track, these employees concurrently perform deconstruction and installation of track material. Because of this concurrent process, CSX must estimate the amount of labor that is related to deconstruction versus installation. As a component of the depreciation study for road and track assets, management performs an analysis of labor costs related to the self-constructed track replacement work, which includes direct observation of track replacement processes. Through this analysis, CSX determined that approximately 20% of labor costs associated with track replacement is related to the deconstruction of old track, for which certain elements are expensed, and approximately 80% is associated with the installation of new track, which is capitalized.

Capital investment related to locomotives and freight cars comprises the second largest category of the Company’s capital assets. This category includes purchases of locomotives and freight cars as well as costs to modify or rebuild these assets, which are capitalized if the investment incurred extends the asset’s service life or improves utilization. Improvement projects must meet specified dollar thresholds to be capitalized and are reviewed by management to determine proper accounting treatment. Routine repairs, overhauls and other maintenance costs, for all asset categories, are expensed as incurred.

The depreciable assets of the Company are depreciated using either the group-life or straight-line method of accounting, which are both acceptable depreciation methods in accordance with GAAP. The Company depreciates its railroad assets, including main-line track, locomotives and freight cars, using the group-life method. Assets depreciated under the group-life method comprise 86% of total fixed assets of $52.2 billion on a gross basis as of December 2024. The remaining depreciable assets of the Company, including non-railroad assets and assets under finance leases, are depreciated using the straight-line method on a per asset basis. Land is not depreciated.

The group-life method aggregates assets with similar lives and characteristics into groups and depreciates each of these groups as a whole. When using the group-life method, an underlying assumption is that each group of assets, as a whole, is used and depreciated to the end of its group’s recoverable life. The Company currently utilizes different depreciable asset categories to account for depreciation expense for the railroad assets that are depreciated under the group-life method. By utilizing various depreciable categories, the Company can more accurately account for the use of its assets. All assets of the Company are depreciated on a time or life basis.

The group-life method of depreciation closely approximates the straight-line method of depreciation. Additionally, due to the nature of most of its assets (e.g. track is one contiguous, connected asset), the Company believes that this is the most accurate and effective way to properly depreciate its assets.

Management performs a review of depreciation expense and useful lives on a regular basis. Under the group-life method, the service lives and salvage values for each group of assets are determined by completing periodic depreciation studies and applying management’s methods to determine the service lives of its properties. A depreciation study is the periodic review of asset service lives, salvage values, accumulated depreciation, and other related factors for group assets conducted by a third-party specialist, analyzed by the Company’s management and approved by the Surface Transportation Board ("STB"), the regulatory board that has broad jurisdiction over railroad practices. The STB requires depreciation studies be performed every three years for equipment assets (e.g., locomotives and freight cars) and every six years for road and track assets (e.g., bridges, signals, rail, ties, and ballast). The Company believes the frequency of depreciation studies currently required by the STB, complemented by annual data reviews conducted by a third-party specialist and analyzed by the Company's management, provides adequate review of asset service lives and that a more frequent review would not result in a material change due to the long-lived nature of most of the assets.

The Company completed a depreciation study for its road and track assets in 2020 and for equipment assets in 2022, both of which resulted in changes to accumulated depreciation, service lives, salvage values, and other related factors for certain assets. The 2022 equipment study resulted in an increase in annual depreciation expense of approximately $80 million primarily due to deferred losses on assets depreciated using the group-life method. The Company plans to complete the next depreciation study for equipment assets in 2025.

Since the rail network is one contiguous, connected network it is impractical to maintain specific identification records for these assets. For track assets (e.g., rail, ties, and ballast), CSX retires assets on a statistical curve relative to the age of the assets. Equipment assets (e.g., locomotives and freight cars) are specifically identified at retirement. When an equipment asset is retired that has been depreciated using the group-life method, the cost is reduced from the cost base and recorded in accumulated depreciation.

For sales or retirements of assets depreciated under the group-life method that occur in the ordinary course of business, the asset cost (net of salvage value or sales proceeds) is charged to accumulated depreciation and no gain or loss is immediately recognized. This practice is consistent with accounting treatment prescribed under the group-life method. As part of the depreciation study, an assessment of the recorded amount of accumulated depreciation is made to determine if it is deficient (or in excess) of the appropriate amount indicated by the study. Any such deficiency (or excess), including any deferred gains or losses, is amortized as a component of depreciation expense over the remaining service life of the asset group until the next required depreciation study. Since the overall assumption with the group-life method is that the assets within the group on average have the same service life and characteristics, it is therefore concluded that the deferred gains and losses offset over time.

For sales or retirements of assets depreciated under the group-life method that do not occur in the ordinary course of business, a gain or loss may be recognized if the sale or retirement meets each of the following three criteria: (i) it is unusual, (ii) it is material in amount, and (iii) it varies significantly from the retirement profile identified through depreciation studies. No material gains or losses were recognized on the sale of assets depreciated using the group-life method in 2024, 2023 or 2022, as no sales met the criteria described above.

When the Company sells or retires land, land-related easements or assets depreciated under the straight-line method, a gain or loss is recognized in purchased services and other on the consolidated statements of income. Primarily as a result of its initiative to monetize non-core properties, the Company recognized gains on the sale of properties of $11 million, $34 million, and $238 million in 2024, 2023 and 2022, respectively. Gains in 2022 include amounts from the Virginia transaction discussed below.

On March 26, 2021, the Company entered into a comprehensive agreement to sell certain property rights in three CSX-owned line segments to the Commonwealth of Virginia over three phases. The timing and amount of gains recognized were based on the allocation of fair value to each conveyance, the timing of future conveyances and collectability. In 2022, $125 million of proceeds were collected and gains of $144 million were recognized. Over the course of this transaction, which was completed in 2022, total proceeds of $525 million were collected and total gains of $493 million were recognized.

Properties and other long-lived assets are reviewed for impairment whenever events or business conditions indicate the carrying amount of such assets may not be fully recoverable. Initial assessments of recoverability are based on estimates of undiscounted future net cash flows associated with an asset or a group of assets in accordance with the Property, Plant, and Equipment Topic in the ASC. Where impairment is indicated, the assets are evaluated and their carrying amount is reduced to fair value based on discounted net cash flows or other estimates of fair value. Impairment expense of $24 million in 2024, $2 million in 2023, and $4 million in 2022 was primarily due to the discontinuation of certain in-progress projects. Impairment expense is recorded in purchased services and other expense on the consolidated income statement.

The Company is a party to contracts with recipients and subrecipients of awards from federal, state and local governmental agencies. These awards are typically in the form of cash for purposes of making improvements to the rail network as part of public safety, corridor expansion or economic revitalization initiatives. The awarding agency generally specifies how the awards are to be spent by the recipients and may include limited conditions requiring return of the assistance.